Latest move ‘unlikely to provide a material boost’ but shows strength of the partnership, says analyst
Shares of Affirm Holdings Inc. were flying 13% higher in Wednesday trading after the buy-now-pay-later operator saw its relationship with Amazon.com Inc. expand.
The two companies announced Wednesday morning that eligible U.S. merchants who offer Amazon AMZN, -4.25% Pay will be able to add Affirm’s AFRM, +2.40% adaptive-checkout capabilities as a payment option for consumer checkout.
The arrangement extended Affirm’s involvement with Amazon, as Affirm’s BNPL options were already available to the e-commerce giant’s customers on the Amazon site and mobile app.
“By integrating Affirm’s Adaptive Checkout, thousands of merchants can offer their customers personalized payment options and increased spending power through Amazon Pay’s convenient and secure checkout experience,” Affirm President Libor Michalek said in a release.
SVB MoffettNathanson analyst Eugene Simuni said he sees the latest announcement as “a positive signal on the strength of the Affirm/Amazon partnership” but also one that’s “unlikely to provide a material boost to Affirm’s operating performance.”
He noted that Amazon Pay, a wallet for third-party merchants, accounts for perhaps 1% to 2% of U.S. e-commerce volumes and has been losing steam lately.
“Following the recent spike in Affirm’s share price (including today’s move) we remain cautious on the stock,” he wrote, while maintaining a market-perform rating and $17 target price. “To get more constructive on the name we are looking for a significant and consistent (multi-quarter) improvement in two key operating metrics,” originations growth and gross-profit yields.
In his view, Amazon doesn’t help on either front.